4 Ways Buying Used Saves You Money Over the Long Term
The process of buying a car can be overwhelming. Between the long list of makes and models, as well as the decision to buy new or pre-owned, you could easily find yourself wondering which option is best for your financial situation and lifestyle. If you’re looking to save over the life of the vehicle, buying pre-owned is an excellent alternative to shopping for a brand-new car.
One of the biggest costs that comes with buying a new car is depreciation. As soon as you drive off the dealership lot, the vehicle’s value will immediately drop. How much it drops depends on the model you choose, but the average vehicle will drop by 10 percent as soon as you purchase it. Cars continue to drop in value over the next five years, losing up to 60 percent of their initial purchase price in that time period. Cars with fewer options or upgrades tend to depreciate faster, as do those from brands that aren’t as in demand.
By choosing to purchase a pre-owned car, you don’t have to worry as much about the depreciation. You can save by choosing a vehicle with the features and upgrades you want, without having to spend a fortune to get them. The value of the car may continue to drop slightly if it’s less than a few years old, but you won’t have the same hit as you would if you purchased it new.
If you choose a certified pre-owned car, it may come with additional warranty coverage that can provide an additional layer of protection. There are some risks that come with buying pre-owned, especially if you don’t go through a dealer that has properly inspected and vetted the car. With a warranty on the vehicle, you don’t have to worry as much about potential issues since major malfunctions and defects would be covered.
Lower Insurance Costs
The cost of an insurance policy on a vehicle is directly tied to its value. The insurance company has to protect itself, so more expensive cars cost more to insure since they cost more to replace. If you choose a pre-owned model that has all the latest safety features, you can save a bundle on monthly insurance premiums. Additionally, registering the car initially and continuing to keep it registered every year will cost less. The sales tax on your vehicle purchase is dependent on the purchase price, so you can save on interest by buying pre-owned as well.
If you’ve been saving up for a vehicle for a while, you could have enough to pay for a pre-owned vehicle outright. Even if you’re not quite there, you may qualify for a lower rate when you choose a pre-owned model. Lenders understand the reality of new vehicle depreciation, so they may tack on higher fees to protect themselves should the borrower stop paying based on the terms of the loan.
At Hubert Vester Auto Group, we have an impressive selection of high-quality pre-owned vehicles. Visit our location to learn more about the options available and test drive your dream car.